A judge denied Uber's bid to avoid a trial with Waymo — and referred Uber's case for a possible criminal investigation

A judge has
asked the US attorney to examine whether Uber may have broken the
law and stolen technology to build self-driving cars, a stunning
twist in a legal dispute between two of the tech industry's most
powerful companies.

The order by Judge William Alsup late on Thursday was one of two
major legal setbacks that Uber suffered, with Alsup also ruling
that Google's self-driving-car spinout, Waymo, could take its
claims against Uber to trial, denying Uber's bid to move the case
into private arbitration.

The case, which has pitted two of Silicon Valley's largest tech
companies against each other, could affect the future of the
nascent self-driving-car industry, a market analysts believe
could eventually be worth tens of billions of dollars and upend
the automotive and transportation industries.

The dispute has already taken numerous surprising twists,
including allegations of evidence being hidden from the court,
theories about a shell company, and a high-profile engineer who
has refused to testify and invoked his Fifth Amendment right
against self-incrimination. Google previously invested in Uber,
back when the ride-hailing company was still a young startup and
had not yet become the world's most valuable private tech
company.

Uber declined to comment on the referral to the US attorney's
office, but it decried the order denying its bid for arbitration.

"It is unfortunate that Waymo will be permitted to avoid abiding
by the arbitration promise it requires its employees to make," an
Uber representative told Business Insider. "We remain confident
in our case and welcome the chance to talk about our
independently developed technology in any forum."

Unwarranted accusations

Uber

Alsup referred
the case to the US attorney to examine whether Uber broke the
law, raising the prospect of a potential criminal investigation
into the ride-hailing company. The case is referred to the US
attorney for "investigation of possible theft of trade secrets
based on the evidentiary record supplied thus far concerning
plaintiff Waymo LLC's claims for trade secret misappropriation,"
Alsup wrote in a separate order Thursday evening. "The court
takes no position on whether is or is not warranted, a decision
entirely up to the United States Attorney."

An additional decision regarding a preliminary injunction to stop
part of Uber's self-driving-car research is also expected
shortly.

Alsup's denial is the first major decision in the case since the
dispute between the companies kicked off in February when Waymo,
the self-driving-car division that spun out of Google in
December, accused Uber of stealing its trade secrets and
intellectual property and of infringing on patents related to its
lidar systems.

Since then,
Uber's lawyers have argued that Google has made its
arbitration agreement overly broad when it says they have to
arbitrate disputes with anyone as it relates to an individual's
employment. Much of Waymo's case is built on the actions taken by
Anthony Levandowski, a former Google engineer accused of
downloading 14,000 files from Google before leaving the company.

Uber argued that Waymo, now a separate spinout of Google,
purposefully brought the case against Uber and not Levandowski to
keep it in the public spotlight and avoid its obligation to his
employment agreement. While any disputes between Waymo and
Levandowski would have to be bound by the employment contract,
Waymo did not sue Levandowski directly; rather, it sued Uber and
the companies founded by Levandowski that were acquired by Uber,
including Otto.

"Defendants have repeatedly accused Waymo of using 'artful' or
'tactical' pleading to evade its arbitration obligations by
omitting Levandowski as a defendant. These accusations are
unwarranted," Alsup wrote.

Obstructing the narrative

Instead, Alsup says Waymo followed the proper course of action.

Kalanick with Anthony Levandowski.Associated Press

"Waymo has honored its obligation to
arbitrate against Levandowski by arbitrating its claims
(concerning employee poaching) against Levandowski," Alsup
continued. "Its decision to bring separate claims against
defendants in court was not only reasonable but also the only
course available, since Waymo had no arbitration agreement with
defendants."

"This was a desperate bid by Uber to avoid the court's
jurisdiction," a Waymo representative said. "We welcome the
court's decision today, and we look forward to holding Uber
responsible in court for its misconduct."

Alsup also had a few words for Levandowski in his motion to deny
arbitration, saying the sidelined head of Uber's self-driving-car
division "continues to obstruct" after invoking his Fifth
Amendment right to avoid self-incrimination.

"Even though he is not a defendant here, moreover, Levandowski's
assertion of his Fifth Amendment privilege has obstructed and
continues to obstruct both discovery and defendants' ability to
construct a complete narrative as to the fate of Waymo's
purloined files," Alsup wrote.